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Rod Smith

Execs Dismiss New York Post Story

25 June 2004

LAS VEGAS -- One East Coast daily last weekend came up with the unique proposition that International Gaming Technology not only stood to benefit from MGM Mirage's $7.9 buyout of Mandalay Resort Group, but actually pushed the deal to kill off potential competition.

The New York Post reported that IGT had "encouraged the deal to crap out Mandalay" because it was threatening to become "an erstwhile competitor" for the world's leading slot machine maker.

The Post was referring to the approval a Mandalay subsidiary, Revive Partners, recently got from Nevada regulators to develop and market ticket-in, ticket-out technology it could use in up to 5,000 of its older slot machines over the next three to five years.

Although the Post story reported IGT had pulled off a "big coup" by successfully encouraging MGM Mirage majority owner Kirk Kerkorian to make the merger move, officials at MGM Mirage and IGT called the tabloid's story laughable, while analysts said it missed the mark by a mile.

"We got a kick out of it," IGT marketing boss Ed Rogich said. "We couldn't tell if it was in the Post or the (National) Enquirer."

He said the speculation in the Post, which has a daily circulation of more than 400,000, wasn't worth commenting on.

"It was pretty far out there," Rogich said. "You had to laugh at saying we drove (the MGM Mirage buyout of Mandalay) in any way."

MGM Mirage President Jim Murren called the Post article "fanciful," suggesting the newspaper applied "a high degree of imagination" to its reporting.

"But the story was absurd," Murren said. "Definitely, we had no calls (from IGT) relative to the transaction. The dialogue (negotiating the sales agreement) was limited to MGM and Mandalay, period."

Wall Street analysts generally were more succinct in their criticism, with one calling the article "just plain stupid."

Analysts also noted that, even though the Post story suggested the merger would prevent new competition for IGT, Mandalay's technology has not been proved and has yet to be installed in any slot machines.

Furthermore, at most it represented the possible loss of between 1,000 and 1,600 slot machines sales a year for a company that sells more than 80,000 slot machines a year, just in this country.

Eric Hausler, gaming analyst for Susquehanna Financial Group, said that although the merger might prove to be a slight, incremental positive for IGT, it "simply won't move the needle much, not noticeably."

In fact, a source familiar with MGM Mirage's plans to integrate the two companies said no decision has been been made on whether the new company will even continue developing the slot technology Mandalay was working on.

"We're in the early stages of our analysis. It'll probably be several more months before a decision is made," he said.

Execs Dismiss New York Post Story is republished from